In the aftermath of the pandemic, businesses in nearly every industry are facing a common enemy…a labor shortage. Manufacturing plants, restaurant and hospitality, and a variety of other sectors are struggling to fill jobs. The problem is not simply for unskilled positions either. Companies are finding it hard to fill jobs requiring more advanced skills as well. As more workers are wanting greater flexibility and prefer working-from-home, many are caving to demands. But this is not the only solution to the problem. In fact, businesses are finally realizing that outsourcing jobs is one strategy that has many benefits. (Go in-depth on how working from home is the new paradigm in this important Bold story!)
Outsourcing solutions for company labor needs is not something new or revolutionary. But the landscape has certainly changed in recent years. What began as a means to cut costs and offer more competitively priced goods has evolved. Many businesses are outsourcing jobs today in order to provide more efficient and higher quality products and services. Those companies who refuse to consider these strategies are increasingly finding themselves behind the times. The truth of the matter is that outsourcing solutions offer many advantages that simply cannot be ignored. If businesses wish to be competitive in the marketplace today, then outsourcing jobs is something to be seriously considered.
“The key benefit of outsourcing is evolving from cost-cutting to process and labor optimization. It will continue to be one of the most important components of business strategy for decades to come.” – Boris Kontsevoi, President and CEO of Intetics, Inc.
The Evolution of Outsourcing Jobs
To some extent, outsourcing solutions date back as far back as the diversification of labor. Skilled craftspeople and workers might be solicited to provide specialized services in unique situations. But outsourcing jobs became more mainstream between the 1970s and 1990s. It was during this time that globalized trade advanced significantly with foreign nations like China, India, and Japan. As trade expanded, multinational companies soon realized that outsourcing jobs to cheaper labor gave them a cost advantage. The labor was not as skilled in many cases, which reduced the quality of goods at times. But regardless, this got the outsourcing ball rolling.
Since the 1990s, however, things have changed on a global scale. The same offshore workforce that began in the twentieth century enhanced their skills and talents. The very companies outsourcing jobs previously investing in training remote workers in an array of specialties. As a result, the labor pool abroad is much more advanced than they were before. Not only can companies shop around for low-cost human resources. But they can also locate better talent in other areas as well. The Internet and the vast array of technological advances in telecommunications have aided this greatly. Thus, outsourcing solutions today are often pursued to find key talent than they are lower costs.
“Those savings and those extra profits [from outsourcing jobs] aren’t put under the mattress. Most of it is spent or invested in the United States in ways that are hard to track but have surely created hundreds of thousands of jobs in other companies and other industries.” – Steven Pearlstein Robinson, Professor of Public Affairs, George Mason University
The Allure of Outsourcing Solutions
Understandably, companies are attracted to outsourcing solutions for these 3 main reasons. Outsourcing jobs allow businesses to reduce costs, access specialized skills, and improve their efficiency. But this same strategy has additional benefits as well that are inherently appealing. Outsourcing gives companies tremendous flexibility in hiring personnel. Without having to commit to a full-time position, companies can simply hire talent as needed. This may be project-based, or it may be more of a freelance-contract type of arrangement. Just as workers are attracted to the flexibility of the gig economy, business are finding similar appeal related to outsourcing.
One of the criticisms of outsourcing jobs has always been the potentially negative effect it has on unemployment and domestic jobs. As positions are granted offshore or to freelance contractors, domestic workers naturally feel insecure. But the cost savings and competitive advantages that outsourcing solutions offer do come full circle. Such companies excel, grow, and end up hiring more workers. In other instances, spin-off businesses are created, increasing the number of jobs available. And most notably, the technologies that facilitated outsourcing to begin with will eventually displace many workers regardless. This is already being seen with robotics and automation during the current labor shortage.
“It remains an open-ended question whether, on balance, hiring abroad leads to more or fewer workers back home.” – Matthew Slaughter, Professor at the Tuck School of Business, Dartmouth College
Newer Models of Outsourcing Solutions
As companies have increasing begun outsourcing jobs to white-collar workers, new models and arrangements have developed. Many of these new arrangements involve greater risk-sharing between businesses and those employed. In fact, some link compensation to output or even outcomes, which attracts employers as well. Likewise, businesses are experimenting with a variety of new outsourcing concepts. Offshore project teams, multi-sourcing, and remote in-sourcing are just of a few of these recent approaches. Based on this, it’s clear that outsourcing solutions are becoming increasingly more sophisticated.
Some companies remain hesitant to pursue outsourcing solutions for a variety of reasons. However, the current labor shortage may be just enough to persuade them it’s worthwhile. Regardless, many companies have already taken full advantage of these trends and are provided their own outsourcing solutions for select industries. For example, Sodexo outsources services in the food industry. IBM does the same for IT services. Foxconn and Lenovo are outsourcing computer manufacturing as well. And there are many other companies that outsource specific aspects of its manufacturing or supply chain to others. It would seem that in order to be competitive, this approach is worth strong consideration.
Pursuing Outsourcing Solutions – Where to Begin?
Depending on the specific industry and situation, different companies pursue outsourcing solutions differently. Some have in-house expertise that they can lean on when outsourcing jobs. But others need guidance and insights to help guide them through the process. In this regard, partnering with a firm with proven knowledge in the field can go a long way toward one’ success. Skilled outsourcing services offer a low-risk approach in finding the right outsourcing strategies to pursue. But regardless of the route taken, it’s evident that outsourcing jobs offers a great approach in addressing today’s labor shortage. And it’s also an approach that all companies should consider to remain competitive in their industry.